[中报]海尔智家(600690):海尔智家股份有限公司2023年半年度报告（英文版）
原标题:海尔智家:海尔智家股份有限公司2023年半年度报告（英文版） II. All directors attend the Board of Directors. III. The interim report is unaudited. IV. Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the interim report is true, accurate and complete.V. Proposal of profit distribution or proposal of converting capital reserves into share capital for this reporting period resolved and passed by the Board No VI. Disclaimer in respect of forward-looking statements √ Applicable □ Not Applicable Forward-looking statements such as future plans, development strategies as set out in this report do not constitute our substantial commitment to investors. Investors are advised to pay attention to investment risks. VII. Is there any fund occupation by controlling shareholders and other related parties fornon-operational purposes No VIII. Is there any provision of external guarantee in violation of prescribed decision-makingprocedures? No IX. Are there more than half of the Directors could not warrant the truthfulness, accuracy andcompleteness of the interim report disclosed by the Company No X. Important risk warnings For the possible risks which the Company may encounter, please refer to the relevant information set out in the section of “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.XI. Others □ Applicable √ Not Applicable Chairman of the Board: LI Huagang Haier Smart Home Co., Ltd 30 August 2023 — SECTION I DEFINITIONS 4 — SECTION II GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS 6— SECTION III MANAGEMENT DISCUSSION AND ANALYSIS 12 — SECTION IV CORPORATE GOVERNANCE 49 — SECTION V ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES 53 — SECTION VI SIGNIFICANT ISSUES 64 — SECTION VII CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS 77— SECTION VIII RELEVANT INFORMATION OF PREFERRED SHARES 85 — SECTION IX RELEVANT INFORMATION OF CORPORATE BONDS 86 — SECTION X FINANCIAL REPORT 87
DEFINITION OF FREQUENTLY USED TERMS CSRC China Securities Regulatory Commission SSE Shanghai Stock Exchange The Company, Haier Smart Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”, Home and the original short name is “Qingdao Haier” Four Major Securities China Securities Journal, Shanghai Securities News, Securities Times, Newspapers Securities Daily Haier Electronics, 1169 Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong, stock code: 01169.HK), a subsidiary as accounted for in the consolidated statement of the Company. Haier Electronics has been privatized by way of H shares issuance on 23 December 2020 and became a wholly owned subsidiary of the Company since then. GEA GE Appliances, household appliances assets and business of General Electric Group, have currently been owned by the Company. FPA Fisher & Paykel Appliances Holdings Limited (Chinese Name: 斐雪派克) was established in 1934 and is known as the national appliance brand of New Zealand, the global top-level kitchen appliance brand and the famous luxury brand of the world. It has products including ventilator, gas stove, oven, dishwasher, microwave oven, built-in freezer, washing machine, clothes dryer and etc. Its business covers over 50 countries/regions across the world. FPA is wholly-owned subsidiary of the Company. Candy Candy Group (Candy S.p.A) is an international professional appliances manufacturer from Italy. Since its establishment in 1945, it has been committed to enabling the global users to enjoy a higher quality of life through innovative technologies and quality services. Candy Group has been prestigious in the global market with users all over the world via its ten self-owned professional household appliance brands. In January 2019, Candy became a wholly-owned subsidiary of the Company. CMM China Market Monitor Co., Ltd., as an authoritative market research institute in Chinese home appliances area, was established in 1994 and has been focusing on research of retail sales in China consumption market ever since.Euromonitor Euromonitor, established in 1972, is the leading strategic market information supplier and has over 40-years of experience in respect of publishing market report, commercial reference data and on-line database. They create data and analysis on thousands of products and services around the world.All View Cloud All View Cloud (AVC) is a big data integrated solution provider to the smart home field, providing enterprises with big data information services, regular data information services and special data services. IEC The International Electrotechnical Commission. Founded in 1906, it is the world’s first organization for the preparation and publication of international electrotechnical standardization and is responsible for international standardization for electrical engineering and electronic engineering. The goals of the commission include: to effectively meet the needs of the global market; to ensure that the standards and conformity assessment programs are applied globally in a prioritized manner and to the greatest extent; to assess and improve the quality of products and services involved in its standards; to create conditions for the common use of complicated systems; to improve the effectiveness of the industrialization process; to improve human health and safety, and to protect the environment. IEEE The Institute of Electrical and Electronics Engineers, an international association of electronic technology and information science engineers, is currently the largest non-profit professional technology society in the world. It is committed to the development and research of electrical, electronic, computer engineering and science-related fields, and has developed into an international academic organization with great influence in terms of the fields of space, computer, telecommunications, biomedicine, power and consumer electronics. Model of Rendanheyi The concept of “Achieving win-win via Rendanheyi (人單合一) “is the (人單合一) guarantee of Haier’s sustainable operation and the driving force of the Company featuring a self-motivated and empowering corporate culture. “Ren” is an employee who has the spirit of entrepreneurship and innovation; “Dan” is to create value for users. The “Rendanheyi (人單合一) “management model encourages employees to create value for users with an entrepreneurial mindset, and to achieve self-value in line with the those of the Company and its shareholders. COP The ratio of cooling capacity (heating capacity) to input power that the HVAC system can achieve. The larger the ratio, the more efficient and energy-saving the system is. Company and Key Financial Indicators I. INFORMATION OF THE COMPANY Chinese name 海尔智家股份有限公司 Chinese short name 海爾智家 English name Haier Smart Home Co., Ltd. English short name Haier Smart Home Legal representative Li Huagang II. CONTACT PERSON AND CONTACT INFORMATION Secretary to Representative of Company Secretary the Board securities affairs (D/H shares) Others Name Liu Xiaomei Liu Tao Ng Chi Yin, Trevor Global Customer Service Hotline Address Department of Department of Room 3513, 35/F, / Securities of Haier Securities of Haier The Center, 99 Smart Home Co., Smart Home Co., Queen’s Road Ltd. Haier Science Ltd. Haier Science Central, Central, and Technology and Technology Hong Kong Innovation Innovation Ecological Park, Ecological Park, No. 1 Haier Road, No. 1 Haier Road, Qingdao City Qingdao City Tel 0532-88931670 0532-88931670 +852 2169 0000 4006 999 999 Fax 0532-88931689 0532-88931689 +852 2169 0880 / Email [email protected] [email protected] [email protected] / III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION Registered address Haier Park, Laoshan District, Qingdao CityHistorical change of the Prior to the Company’s listing in 1993, the registered address of the registered address Company was No.165 Xiaobaigan Road, Sifang District, Qingdao City, Shandong Province, and has changed to the current address since 1994, during which the address name was adjusted in line with the change of name of the industrial park but the actual site remains unchanged. Business address Haier Science and Technology Innovation Ecological Park, Laoshan District, Qingdao City Postal code of the 266101 business address Website https://smart-home.haier.com/cn/ Email [email protected] Query index for any Not applicable changes during the reporting period IV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE AND DEPOSIT Designated newspaper for Shanghai Securities News, Securities Times, China Securities Journal, information disclosure Securities Daily Website for publishing www.sse.com.cn interim report Other websites for interim https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de, report disclosure https://www.hkexnews.hk Deposit place of interim Department of Securities of Haier Smart Home Co., Ltd.report Haier Science and Technology Innovation Ecological Park, No. 1 Haier Road, Qingdao City Query index for any Not applicable changes during the reporting period V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY Stock Short Stock Exchange of Stock Short Name Before Type of Shares Shares Listed Name Stock Code Variation A share Shanghai Stock Haier Smart 600690 Qingdao Haier Exchange Home D share Frankfurt Stock Haier Smart 690D Qingdao Haier Exchange Home VI. OTHER RELATED INFORMATION □ Applicable √ Not Applicable VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY (I) Key accounting data Unit and Currency: RMB Increase/decrease for the reporting period compared with the For the reporting The corresponding period of last year corresponding period After Before period of last year Key accounting data (January-June) adjustment adjustment (%)Operating revenue 131,626,581,506.56 121,640,067,379.35 121,857,522,462.22 8.21Net profit attributable to shareholders of the listed Company 8,963,875,999.84 7,959,684,042.65 7,949,084,472.70 12.62Net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company 8,603,977,764.58 7,490,693,705.38 7,490,693,705.38 14.86Net cash flows from operating activities 6,790,530,462.54 5,965,070,983.86 5,964,247,657.22 13.84 Increase/ decrease as at the end of the reporting As at the end of period As at the end of reporting period of last year compared the reporting After Before with that of period adjustment adjustment last year (%) Net assets attributable to shareholders of the listed Company 96,681,175,780.71 93,454,454,213.67 93,422,647,664.43 3.45Total assets 246,302,105,777.51 235,938,042,474.57 235,842,254,826.77 4.39 (II) Key financial indicators Increase/decrease for the reporting period compared with the For the reporting corresponding period period of last year Key financial indicators (January-June) The corresponding period of last year (%)After Before adjustment adjustment Basic earnings per share (RMB/ share) 0.97 0.85 0.85 14.12 Diluted earnings per share (RMB/ share) 0.96 0.85 0.85 12.94 Basic earnings per share after deducting non-recurring profit or loss (RMB/share) 0.93 0.80 0.80 16.25 Weighted average return on net – assets (%) 9.16 9.23 9.24 0.07 Weighted average return on net assets after deducting non- recurring profit or loss (%) 8.80 8.71 8.71 0.09 Explanation of the key accounting data and financial indicators of the Company□ Applicable √ Not Applicable VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS ACCOUNTING STANDARDS √ Applicable □ Not Applicable (I) Difference in net profit and net assets attributable to shareholders of the listed company in financial statements as disclosed in accordance with International Accounting Standards and Chinese Accounting Standards □ Applicable √ Not Applicable There is no difference between the net profit and net assets attributable to shareholders of the listed company presented in the consolidated financial statements as disclosed in accordance with International Accounting Standards and Chinese Accounting Standards by the Company. (II) Difference in net profit and net assets attributable to shareholders of the listed company in financial statements as disclosed in accordance with overseas accounting standards and Chinese Accounting Standards □ Applicable √ Not Applicable Apart from the financial statements prepared in accordance with International Accounting Standards, the Company has not prepared financial statements in accordance with other overseas accounting standards. (III) Explanation on difference in domestic and overseas accounting standards□ Applicable √ Not Applicable IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT √ Applicable □ Not Applicable Unit and Currency: RMB Non-recurring profit and loss items Amount – Profit and loss on disposal of non-current assets 21,886,978.96Government subsidies through the profit and loss, except for government subsidies that are closely related to the Company’s normal business operations, comply with national policies and regulations, and continue to be enjoyed in a fixed amount or fixed quantity according to certain standards 409,863,390.47Profit and loss from fair value changes of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities, as well as investment gains arising from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities and other debt investments, except the effective hedging related to the normal operations of the Company 31,271,562.35Other non-operating income and expenses except the aforementioned items 30,661,194.26– Reduction: Effect of income tax 77,663,165.02 – Effect of minority equity interest (After Tax) 12,347,767.84Total 359,898,235.26 For the Company’s designation of extraordinary gain or loss items as defined in the “Explanatory — Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 Extraordinary Gains or Losses”, and for extraordinary gain or loss items as illustrated in the “Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the — Public No.1 Extraordinary Gains or Losses” designated as recurring gain or loss items, reasons shall be specified. □ Applicable √ Not Applicable X. OTHERS □ Applicable √ Not Applicable Analysis I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATES AND ITS MAJOR BUSINESS DURING THE REPORTING PERIOD Founded in 1984, the Company is committed to being an enterprise of the times. Through relentless innovation and iterations, we seize opportunities in the industry by continuously launching new products that steer market development. After more than 30 years, the Company has become a global leader in the major home appliance industry, as well as a pioneer in global smart home solutions.— ? Global leader of the major home appliance industry: According to data from Euromonitor an authoritative market researcher, the Company ranked first in terms of sales volume in global major appliance market for 14 consecutive years. The Company has a global portfolio of brands, including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to 2022, Haier brand refrigerators and washing machines ranked first among global major home appliance brands in sales volume for 15 and 14 consecutive years respectively.? Pioneer of global smart home solutions: Capitalizing on our full-range home appliances products, the Company is recognized by Euromonitor as one of the first in the industry to introduce smart home solutions. SAN YI NIAO focuses on customising smart home experience, by building up five core competencies in Smart Home Brain, scenario-based solutions, experiential stores, the SAN YI NIAO interior design tool and the digital platform, we provide end-to-end and full life cycle services that “design a home, build a home and serve a home” for users.Over the years, the Company has established three business segments, namely the Chinese Smart Home Business, the Overseas Home Appliance and Smart Home Business, and Other Business.Smart Home Business in China The Company provides a full range of home appliance products and value-added services in China market through Haier Smart Home APP and SAN YI NIAO APP, supplemented by our offline experience centres, in order to cater for users’ needs for different lifestyle scenarios. Smart Home Business in China comprises Household Food Storage and Cooking Solutions (Internet of Food), Household Laundry Solutions (Internet of Clothing), Air Solutions (Internet of Air), and Household Water Solutions (Internet of Water). ? Household Food Storage and Cooking Solutions (Internet of Food): Through selling in domestic market and exporting products such as refrigerators, freezers, kitchen appliances, as well as providing one-stop smart kitchen scenario solutions and ecosystem solutions including smart cooking and nutrition planning, the Company fully addresses users’ need for convenient, healthy and tasteful gourmet experiences. ? Household Laundry Solutions (Internet of Clothing): Haier’s washing machine focuses on applying original technologies to directly solve users’ pain points in home living scenarios, and create new experiences and value for users. With a product lineup of washing machines, tumble dryers, all-in-one laundry machines, garment care machines, and heated drying racks, the Company has evolved from selling individual products to providing scenario-based solutions, and offering end-to-end laundry care services. For example, the Zhongzihemei (中子和美) three-in-one washer combines washing, drying, and fabric care functions into a single unit, and the Essence Wash washing machine reduces washing time and improves cleaning effectiveness by producing a highly concentrated detergent solution that can quickly soak into clothes through detergent pre-mixing and high pressure spraying. ? Air Solutions (Internet of Air): Home air conditioners: Through domestic sales in China and exports, the Company provides products such as home air-conditioners and fresh air systems, as well as a comprehensive range of full-cycle solutions including coordination of multiple air-conditioners and purifiers, adaptive air flow, air quality monitoring and air disinfection, thereby delivering a healthy and comfortable experience at home and during commute that caters to the user needs in terms of air temperature, humidity and quality.Smart building: The Company is committed to becoming a leader in efficient, sustainable and smart building solutions based on the state’s “carbon peaking and carbon neutrality” strategy. Focusing on the business areas of smart control, environment, energy and system integration of buildings, the Company provides green and smart building solutions integrating “technology + experience + space” for government and commercial buildings, railways, schools, and hospitals.? Household Water Solutions (Internet of Water): Through selling in domestic market and exporting, the Company provides users with electric water heaters, gas water heaters, solar water heaters, air energy heat pump water heaters, POE water purifiers, POU water purifiers, water softening equipment, at the same time, we offer smart water solutions including interactions between water heaters and purifiers, and between heating appliances and water heaters, so as to comprehensively cater to users’ needs for water purification, softening and heating.Overseas Home Appliance and Smart Home Business In addition to China market, the Company also manufactures and sells a comprehensive portfolio of home appliance products and provides value-added services in more than 200 countries and regions, including North America, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East and Africa. In the overseas market, the Company has been manufacturing and selling proprietary appliance products catering for local users’ demands for more than 20 years. During the time, a number of acquisitions contributed to our growth including acquisition of Haier Group Corporation’s overseas white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and Southeast Asia) in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candy in 2019. The development of the Company’s overseas businesses has been fuelled by synergies among our self-developed business and our acquired businesses. At present, the overseas business of the Company has entered a stage of promising growth, having achieved a multi-brand, cross-product and cross-regional presence on a global basis. According to Euromonitor, the Company’s share of the global market (retail volume) for major home appliances in key regions in 2021 is as follows: ranked first in Asia in terms of retail volume, with a 21.4% market share; ranked second in America, with a market share of 15.6%; ranked second in Australia and New Zealand, with a market share of 12.8%. The Company ranked third in Middle East and Africa with a market share of 7.5%, and ranked fourth in Europe with a market share of 8.3%.Other Businesses Building on our established smart home businesses, the Company has also developed small home appliances, channel distribution and other businesses. In particular, the small home appliance business primarily involves small home appliances designed by the Company, produced by outsourced third-party manufacturers and sold under the Company’s brands, which serve to enrich our smart home solutions product mix. The channel distribution business primarily offers distribution services for products such as televisions and user electronics for the Haier Group or third-party brands, which leverages the Company’s sales network. In August 2023, the Company was once again listed among the Top 500 World’s Companies. In February 2023, the Company was named again as the 2023 World’s Most Admired Companies by the Fortune Magazine. We are the only company being selected in Europe and Asia in the home appliances industry, and are the only selected company incorporated outside the US. Meanwhile, the Company is also the world’s only Internet-of-Things (IoT) ecosystem brand being named again as BrandZtm Top 100 Most Valuable Global Brands in 2022. During the period, the Company was named again among Fortune’s first China ESG Impact list and ranked top in the industry; and was named Forbes’ The World’s Best Employers 2022 list. The Company’s ESG effort has also been recognized by external rating agencies, receiving an MSCI ESG rating of BBB and a Wind ESG rating of AAA, both of which are at leading levels in China. Thanks to the above performance, Haier Smart Home was selected into the three major ESG indices of the Hang Seng Index, including the HSI ESG Enhanced Index, the HSI ESG Enhanced Select Index and the HSCEI ESG Enhanced Index. I. Industry overview for the first half of 2023 (1) The domestic market: In the first half of 2023, the Chinese home appliance industry recorded a marginal growth. AVC data showed that the retail sales of home appliances in China reached RMB398.2 billion in the first half of 2023, an increase of 4.4% year-on-year. Growth of various sectors are as follows: Home air conditioning industry: Benefiting from continuous hot weather and low industry inventory levels, growth of the air conditioning category spearheaded the market, with retail volume amounting to 37.265 million units, up 18.8% year-on-year, and retail sales reaching RMB130.16 billion, a year-on-year increase of 19.5%. Refrigerator industry: Product mix upgrades have resulted in an increase in average prices across the industry. Retail volume of the refrigerator industry reached 14.686 million units, down 2.6% year-on-year, while retail sales amounted to RMB47.95 billion, up 5.2% year-on-year. Washing machine industry: Due to a lag in replacement demand and dependence on installation, the industry experienced a slow recovery as retail volume dropped 6% to 14.362 million units, and retail sales amounted to RMB29.91 billion, down 3.2% year-on-year. The tumble dryer industry maintained rapid growth with retail sales reaching RMB4.97 billion, a year-on-year increase of 14.7%. Kitchen appliance industry: Due to the fulfilment of pent-up demand and product mix upgrades, the retail sales of range hoods, stoves, and disinfection cabinets reached RMB24.24 billion, a year-on-year increase of 1.90%. Retail sales of integrated stoves amounted to RMB12.45 billion, a slight decrease of 0.40% year-on-year. Categories such as integrated cooking centres and integrated dishwashers continued to experience rapid growth. Specifically, integrated cooking centres, which combined stove, steaming, and baking units, recorded a significant 286.4% year-on-year increase in revenue online, and a surge of 87.8% in revenue offline. Water heater industry: Due to the rapid growth of demand of gas water heater products, retail sales of the water heater segment reached RMB22.36 billion, up 6.0% year-on-year.Water purifier industry: Benefiting from traffic recovery offline and product mix upgrades, retail sales of the industry continued to grow, with retail revenue reaching RMB9.0 billion, an increase of 8.0% year-on-year. Commodity prices in the domestic market have substantially declined compared to the same period last year; at the same time, market competition has become more rational with stable prices, all of which have collectively contributed to the industry’s profitability improvement. The home appliance market was divided based on purchasing power and consumer attitudes. The high-end market was largely driven by quality consumption and indulgent spending. Taking air conditioners for example, in the first half of 2023, high-end wall-mounted units (priced above RMB3,500) accounted for 12.4% of retail sales, an increase of 3.2 percentage points year-on-year. At the same time, the size of the low-end market was also growing, with online sales of wall-mounted units priced below RMB2,000 up by 1.6 percentage points to 15.2%. In terms of distribution network, e-commerce channels continued to gain shares in volume as consumers have become accustomed to shopping online where services have become more integrated. According to AVC, the online shares of air conditioner, refrigerator and washing machine in terms of retail volume reached 57.1%, 71.8% and 71.9% respectively. Meanwhile, online and offline channels were becoming more integrated, facilitated by live streaming in stores. This approach represents the future direction of retailing by combining the convenience of shopping online with immersive offline experience. Short video platforms like TikTok also accelerated channel fragmentation because of their increasing significance in user acquisition. With improvement in living standards and technologies, home appliances are increasingly integrated with the living space. For example, built-in and integrated appliances are gaining popularity for better utilisation of the space in the kitchen. The use of tumble dryers effectively frees up the balcony for other functions. In addition to hosting guests, entertainment, and family activities, living room appliances are designed with a greater focus on user interaction and experience. Export markets: The global economy experienced a slowdown in 2023, putting pressure on China’s home appliance exports due to sluggish overseas demand and low orders volumes. Exports to Europe and the U.S. suffered from reduced demand and inventory destocking; but exports to Southeast Asia, Middle East and Africa continued to grow. According to data from the General Administration of Customs, the cumulative export of the home appliance industry from January to June 2023 amounted to USD 43.1 billion, representing a 2.0% decrease year-on-year. Exports in RMB term however totalled RMB296.7 billion, up 5.2% year-on-year, with 3.3% decrease in refrigerators, 29% growth in washing machines and 0.4% increase in air conditioners. (II) Overseas market In the first half of 2023, competition intensified and volume declined in major overseas markets due to global economic slowdown, persistent high inflation, and over-draft in appliances demand. (1) North America: In the first half of 2023, lingering inflation and demand exceeding capacity contributed to 3.3% drop in core appliances shipment according to AHAM (Association of Home Appliance Manufacturers). Profitability remains under pressure as improvement in gross profit margins resulting from more favourable raw material and shipping costs was offset by intensifying competitions and promotions.(2) Europe: Inflationary pressures and Russia-Ukraine conflict caused industry demand to decline. According to GFK, retail volume of the home appliance industry decreased 8.1% year-on-year in the first half of the year. However, there are still growth opportunities as consumers have become increasingly attracted to products with class A energy-efficiency during times of shortages. (3) South Asia: ? Driven by gradual economic recovery, home appliances retail volume experienced a slight year-on-year increase in India. High-end, large-capacity products with health benefits were popular with expansions of national and regional chain stores as well as e-commerce platforms. ? In Pakistan, high inflation severely weakened purchasing power, resulting in over 30% volume decline in the industry.(4) Southeast Asia: Thailand experienced a 15% increase in sales volume, benefitting from strong air conditioner performance during hot weather and demand recovery facilitated by return of tourists. Markets including Vietnam faced varying degrees of decline due to economic slowdown and high inflation. (5) Australia & New Zealand: During the first half of the year, the home appliance industry was challenged by sluggish demand, intensified competition, and a significant decrease in new properties sales. According to GFK, the industry’s sales volume dropped by 7.1%, with retail volume down by over 10%. (6) Japan: The industry was impacted by currency depreciation and reduced disposable income caused by higher prices. In the first half of the year, sales volume of refrigerators, freezers and washing machines dropped 9.5% year-on-year. Driven by increase in average unit price, sales revenue decreased slightly by 1.3% year-on-year. Consumer demand for large-capacity, health-boosting, and energy-saving products continued to rise. II. Industry Outlook for the second half of 2023 (1) The domestic market: Economic recovery and policies supporting consumption and real estate will unleash demand for home appliances and drive industry growth. AVC expects a definitive recovery for most of home appliance categories in 2023, with industry retail revenue growth of 6.4%. Export markets: Export business is expected to remain stable amid ending destocking, favourable shipping costs and concluding of interest rate hike. (2) Overseas markets In the short term, more developed markets will still be challenged by weak demand and intensified competition, the industry is more likely to turnaround in 2024. Demand in the South Asian and Southeast Asian markets will gradually recover alongside economic resurgence. Home appliance industry remains resilient in the medium to long term. Future Market Insights believes, global sales revenue will maintain a CAGR of 4.3% from 2022 to 2029. Furthermore, implementation of the “Belt and Road” initiative could facilitate emerging markets including South Asia, Southeast Asia, and the Middle East and Africa in becoming crucial growth hubs. New opportunities still exists in high-end, smart, eco-friendly, and energy-efficient home appliances. II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD √ Applicable □ Not Applicable The Company has established a solid strategic presence and competitive advantage in China and overseas markets. In China’s major home appliance market, the Company has long maintained a leading position across all product categories. According to CMM’s report, the Company has established a continued leading market position in key major home appliance categories in the first half of 2023. In overseas markets, the Company has adhered to its high-end brand creation strategy, building capacity to create leading sustainable growth, which has continuously improved its market share. Building on this foundation, the Company will further consolidate its leadership position in the industry by leveraging integrated synergies of its global unified platforms, through efficiency transformation driven by digitalization, and by leveraging its technological strength and innovative capabilities. As cornerstone for sustainable development, our ‘Rendanheyi (人單合一)’ Model also provided management guidance to the Company, and enabled us to replicate successful experiences. It is believed that the following advantages will help the Company to continue to strengthen its leading position: (i) Dominance in China’s high-end market; rapid growth of overseas high-end brands Riding the trend of consumption upgrade in China, the Company has started to develop the high-end brand Casarte in the Chinese market more than 10 years ago. The creation of high-end brands required not only focus, experience and patience, but also continuous innovation of technological standards and differentiated service capabilities to fulfil user demand for high-quality experiences. The Casarte brand combined the Company’s global technological strengths, product development capabilities and manufacturing craftsmanship, as well as privilege marketing and differentiation services, which has won the trust of users in China’s high-end market. According to data from CMM, the Casarte brand has assumed a definitive leading position in China’s high-end major home appliance market in first half of 2023, ranking first in the retail sales of refrigerator, washing machine and air conditioner categories in the high-end segment. Specifically, in terms of offline retail sales, shares of the Casarte brand of washing machines and refrigerators reached 82.9% and 39.4% respectively in the market with product price above RMB10,000 in China, while its share of air conditioners priced above RMB15,000 in the China’s market reached 29.2%. In the North American market, the Company owns high-end brands such as Monogram, Café, and GE Profile. We achieved our market leader position through launching such key home appliance innovative products including high-end combo heat pump washing-drying machines and pizza ovens. Through the creation of luxurious, customizable and smart technology-enabled user experience, our high-end brands Monogram, Café and GE Profile have grown rapidly.(ii) Smart household solutions that continue to expand and upgradeAs users continued to demand for higher living quality, coupled with the development of technologies such as Internet of Things, big data, cloud computing and artificial intelligence, the industry has shown a smart and high-end development trend that prioritized product suites, based upon scenarios, and home appliances integrated with home furnishings. With leading user insights, extensive product coverage and technological accumulation from intelligent AI algorithms, home big data and IoT equipment technology, the Company was able to provide users with the “1+3+5+N” differentiation-enabled smart scenario solutions riding on the core strength of the Smart Home Brain, building around the five major intelligence spaces at home including living room, kitchen, bathroom, bedroom and balcony, as well as the whole-house solution of “whole-house’s water usage, air, smart control” with infinite number of smart home scenarios. First of all, the Smart Home Brain created the best intelligent experience for users by upgrading the brain technology system. Through iteration of the whole-house sensing system, we unified data collection from multiple devices and constructed a whole-house sensing service model. At the same time, through software and hardware integration and end-to-end cloud integration, we enabled diversified and multi-modal voice and image interactions which opened up a new form of multi-dimensional connectivity. Secondly, in terms of our capabilities in scenario solutions, SAN YI NIAO had converged its capability of intelligent scenario differentiation with spatial integrated design strength and whole product package customisation, whilst matching up mainstream household type with home style and family structure, as well as adapting modern light luxury-style, new Chinese-style, French-style and other sets of digital sample room into the interior design tool, so as to provide its users with customised designs for whole-scenario smart-and-cozy household solutions that embodied concepts of whole space aesthetics, health-technology-nature and genuine smart lifestyle.In addition, SAN YI NIAO’s interior design tool focused on “building a home”, providing users with smart home appliances + smart home solutions. It featured a comprehensive collection of small household design types, smart swift output, preliminary programme functional design and 3D rendering design, empowering designers with speed 3-minute drawings creation and hence realising the transformation from selection by users to customisation for users.Finally, SAN YI NIAO’s digital platform continued to strengthen its capabilities in scenario design, store, user and delivery digitalisation to offer full life cycle service for users, thereby enhancing the value added to active users and increasing conversion of scenario-based transactions.(iii) Extensive and solid global presence with localised operational capabilityIn addition to success in the Chinese market, the Company also prospered in overseas markets. The Company seeks overseas expansion of its own brands as well as synergies with acquired brands to develop overseas markets. Such business strategy has guided the Company to establish R&D, manufacturing and marketing three-in-one structure across multiple brands, products and regions, as well as the model of self-development, interconnection and synergised operation. The Company’s extensive global presence depends on its localised business teams as well as its flexible and autonomous management mechanisms established in various overseas markets, demands. The Company also proactively integrates into local markets and cultures, and has established a corporate image that is recognised by local communities in the overseas regions where the Company operates. The Company established 10+N innovative ecosystems, 122 manufacturing centres, and 108 marketing centres around the world, and achieved a coverage of nearly 230,000 point of sales in overseas markets. (iv) A comprehensive portfolio of proprietary brands recognised by users of all tiersThrough organic growth and acquisitions, the Company has formed seven brand clusters, including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To address the needs of users from different tiers in various markets around the world, the Company has adopted a differentiated multi-brand strategy in different regions that centred around users, so as to achieve an extensive and in-depth user coverage. For example, in the Chinese market: the four brands of Fisher & Paykel, Casarte, Haier and Leader achieved the coverage of premium, high-end, mainstream and niche market groups respectively; in North American market, the six major brands such as Monogram, Café, GE Profile, GE, Haier, Hotpoint comprehensively covered all segments of high-end, mid-range and low-end markets, thereby meeting the preferences and needs of different types of users. (v) Cross-border acquisition and synergy realisation capabilitiesThe Company has an excellent track record of acquisition and integration. The Company has acquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co., Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliance business of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (which has been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in 2019. The Company’s capability to perform acquisition and integration is reflected in the following: First of all, the Company implements the ‘Rendanheyi (人單合一)’ Model in the acquired companies, which is a value-added sharing mechanism for the whole-process team under a common goal. Such model can motivate the acquired companies and their employees, and enable them to generate more value. Secondly, the Company made use of its global platform to empower the acquired companies in terms of strategic planning, R&D and procurement in order to enhance their competitiveness. Thirdly, the Company’s open and inclusive corporate culture can support the acquired companies in establishing a flexible and autonomous management mechanism, which can easily earn recognition from the acquired companies and is conducive to the promotion of integration. (vi) Comprehensive and in-depth global collaborations and empowermentThe Company has made full use of its global collaborative platform, as well as its integrated functions of R&D, product development, procurement, supply chain, sales and brand marketing. It was able to share and expand its successful market development experience to various markets around the world. By strengthening the synergies among its global businesses, the Company has created a strong driving force for its future development.? Global collaborative R&D: The Company has a global collaborative R&D system and has established global technology R&D mechanisms to share common modules, utilise common technologies, and share patents within the scope of compliance. For example, the Company’s R&D team in China joined hands with FPA’s and CANDY’s R&D teams to develop the H20 spray technology, which has been applied to freestanding and built-in dishwashers of Haier, Fisher&Paykel, CANDY and HOOVER, hence strengthening the Company’s overall leadership in product performance. ? Global collaborative product development: The Company has established a global product development mechanism to coordinate global collaborative product development, which can enable regional collaboration and supplementation across product categories. For example, the R&D teams in South Asia and China embarked on a 10-month collaboration, breaking away from the traditional product development model by innovating on team organisation, quality control, product testing and cost control leveraging complementary local resources. The HRT-683 refrigerator jointly developed by this collaboration has become a local mainstream high-end product. ? Global collaborative procurement: The Company has established a global procurement guidance committee to coordinate global procurement activities. The committee has built a global digital sourcing platform that brought together partners across industries and regions to develop an autonomous and controlled global supply chain ecosystem. The committee also created a global database of preferred suppliers and materials to achieve cost reduction by aggregating common resources at the Group level. By unifying procurement rules and processes, the Company established a standardised operating system with differentiated procurement strategies to enhance procurement efficiency while lowering risks. We have also developed a Group-level digital procurement platform to enhance shared capabilities through connecting “materials, businesses, people and mechanisms” to the platform, thereby improving the resilience of our global supply chain.? Global collaborative supply chain: The Company has built an end-to-end digital management system for the global supply chain that spanned from marketing to suppliers to production and logistics. Using intelligent algorithms, the system enabled real-time flexible deployment of global production capacity, and factories across the globe could share and develop smart manufacturing technologies to boost manufacturing competitiveness. ? Global collaborative marketing and brand promotion: the Company operates a multi-level brand portfolio on a global scale, which can realise global collaborative brand promotion. The Company also promotes and introduces successful marketing strategies among regional markets around the world. For example, the Company successfully replicated its sales and marketing model from third and fourth-tier markets in China, in (vii) Industry-leading R&D and technological capabilities To ensure better living experience for users, the Company has established a global leading R&D system under the premise of developing original technologies. In early 2022, the Company established a science and technology committee to leverage our technological innovation system and strengthen our enterprises’ innovation capabilities, which have facilitated our high-end brands, scenario brands and ecosystem brands to achieve leadership positions.? Leadership in terms of original technologies: In the first half of 2023, the Company has innovated a range of solutions that exceeded users’ expectations and made technology more integral to everyday life. For example, the newly launched Neutron F2 Washing and Drying Machine showcases industry’s first ever 1.5m optimal height that allows easy and effortless handling. Defying conventional wisdom, the model’s groundbreaking 3D perspective drying technology introduces contactless capacitance dryness assessment which enables accurate sensing of dryness beneath clothing’s surface and thorough drying with single application, thereby achieving time saving and efficiency. Researched and developed solely and entirely by the Company and wholly independent and controllable, the world first ever hydrostatic air suspension central air-conditioner applies the Bernoulli principle of fluid mechanics where the shaft is lifted and supported by high-pressure gas, thus enables operation without friction. As a result, the model achieves 6x spindle and 1x efficiency enhancements, and 50% energy saving and 50% carbon reduction.（未完）  |